Rick's Rants
or
A Just a Loonie with a Toonie.

October 04, 2006

Our B5 Media Investment

Today we've closed a financing round with our co-lead, Brightspark Ventures into B5 media. At first, I really wanted to just sit back and let the rocks fly and blogosphere go nuts with the who/what/why and the zillions of opinions.

Then I thought, the better approach was to follow in the footsteps of smarter VCs than me (Fred Wilson, Brad Feld to name two) and explain why we've invested in b5 media.

The Rick Segal, newbie venture capitalist disclaimer:

I"m about to invest a bunch of money for these reasons and I could be wrong.

First, blogging is not the end game. Online Bulletin Boards, Journals, Newgroups, etc, have all been around for years and there is nothing inherently new about people expressing opinions, telling stories, sharing recipes, etc. It is not, in my view, about the act of blogging.

What is different today are the habits of a generation coming right up my proverbial tailpipe. They share a passion for information, the sharing of information, and most importantly the critical examination of information as a community. We've seen famous people busted for saying/doing dumb things, amazing ideas get accepted lighting fast, and unknown issues become major mainstream causes virtually overnight.

With all of this comes information overload and, of course, with information overload comes opportunities on a number of fronts.

The most obvious is authority. Today for example, Mike Arrington enjoys some great respect and authority when people think about technology and opinions on start up companies. I, along with 1000s of others, enjoy Techcrunch. Mike's enterprise continues to grow value. I believe that the markets and the focus of b5's increasing blogger ranks will continue to grow their respective authority and thus increase the networks value.

There are opportunities for new authorities on topics of all kinds to emerge and b5 is a great platform to bring those authorities to market.

The next opportunity is a chance to execute on Doc Searl's vision/theory of the intention economy. Doc and I have talked about this for years with Doc writing about this topic often. The general thinking on Doc's thesis applied here is fairly simple. When I sign up for a blog about a specific topic, there is an intent by me to obtain that knowledge. With that knowledge comes the ability to focus economic offers that may be of interest to me. I own a Volvo, read a Volvo blog, and find offers (ads if you will) about things about/for/related to Volvo of interest and not necessarily noise. I love digital photography, listen to smart people and do read the ads when I'm immersed in that hobby.

All of this translates into an opportunity to grow a business that is about the intention economy. While many will dismiss this as just blather about making money with ads, I believe there is more to it and b5 represents a good opportunity (and great team) to test out/play out some of these ideas.

These are early days and Jeremy's team at b5 have some excellent momentum with which to grow, experiment, learn and tune a great business in this 'new media' space.

Finally, there is Shel Israel. Shel has been working behind the scenes with Jeremy and I on the whole topic of the global neighborhood. I'm delighted Shel is going to continue to work with the company in expanding roles over the coming months. Shel's general expertise (and passion) about blogging combined with decades of experience in media, offer b5 a unique perspective and valuable cache of wisdom that we can apply while building the global neighborhoods. There is a super smart person in Dublin Ireland that has forgotten more than I know about my Nikon D200 camera. That person, blogging, becomes valuable to me and all the other Nikon Digital buffs. The global neighborhood is about finding her and b5 is about building that structure to have the voice heard, possibly become an authority and hopefully add value to the over all b5 network.

Lots and lots of people are going to go, yeah right, bunch of VC lemmings chasing flavor of the month, pissing away gobs of cash on another me too blogger pile. In the words of Seth Godin, I can only respond; so?

Slightly more seriously, it is early days. We've found a very, very passionate team of young entrepreneurs and a super partner in Brightspark who want to collectively explore these opportunities. I expect the rocks, expect the armchair quarterbacking and expect, well, expect what goes on in the blogosphere.

But before you pick up that rock or fire off that rant, how about a well done for Jeremy, Duncan, Darren, Shai for working hard to build a business, actually have revenue (!), and showing the passion, excitement, and drive that, in the end, will matter the most. Well done, folks, well done.

Comments

Dimitar,

Correct. Talent, Technology, Content, Vision, and Ideas. Those are the things we invest in.

It is early days and, again, correct, we have lots of boring/lame stuff out there. Jeremy and crew are smart and creating something new is the hallmark of a great start up and (hopefully) a great start up investment.

I understand the reasons for investing in a venture like this, but you've given precious little information about why exactly this company is a good investment. Would like to hear more about b5, their value prop, etc.

Congrats to Jer and the whole b5 team. Not only did they get something "out of the box" funded. But they got it funded by two great teams of VCs. Between Rick, Amy and John at JLA and Salim, Tony, Mark and Steven at Brighspartk.

b5 is poised to go to a "whole nutha leva". It also doesn't hurt that they scooped, uber blogger and CDN tech voice Mark Evans (now fomerly of the national post).

I don't think there's much chance of that Jeremy - from what I read here I don't think many legends in their own lunchtime in the blog world are capable of thinking outside the box so they're not going to be expecting much.

I think Varun makes a good contribution. I read blogs by very smart people who've taught me much but an awful lot of the time I find myself disagreeing with them. For me, the boon of all this information is that it allows me to cherrypick the nuggets and the network that really matters is the informal one I create via my grazing. Thus my loyalty to any individual network is far from assured and content cannot be imposed on me.

From a revenue perspective, I am an advertising sceptic in all media in terms of effectiveness and online in terms of reader intent and mindset. In all my years of browsing online, I am still yet to clickthough on an ad. So, I derive information from blogs and sites which inevitably impact on my buying behaviour but I wouldn't be generating any income for b5. Equally, I am aware of the eye-tracking studies that increasingly show that peopel ignore the right hand column online because they assume it will be filled with ads and that's not what they are there for.

On the other hand, the intention economy model is clearly preferable to the interruptive model because it bypasses the first half of the AIDA pathology and in playing devil's advocate, one should not assume (as many do) that their own behaviour or that of their social circle can be extrapolated to predict that of the whole audience. As long as advertisers (rightly or wrongly) believe that advertising works for them, then the model has potential.

The really interesting question for me is that faced in other advertising media, but which I think is exacerbated by the intimacy of blogging. Namely, how to maintain the objectivity of the bloggers from which the trust/intention is derived while placing them in an increasingly commercial environment with all the potential for perceived or genuine conflicts of interest.